Facts and Background:
Action for Insurance Bad Faith based on insurer’s wrongful refusal to pay benefits to insured under a Commercial General Liability Insurance Policy.

Amor Ministries (“Amor”) is a non-profit religious organization that acts as a facilitator and coordinator for civic groups and churches seeking to engage in construction projects in impoverished areas, including Puerto Penasco, Mexico. Amor’s home office is in San Diego, California. Ronald Day and Heather Day (“Days”) are Arizona residents. Century issued a commercial general liability insurance policy (“Policy”) to Amor for the period February 13, 2006 to February 13, 2007. Under the Policy, Century was obligated to defend Amor against lawsuits brought against it and indemnify Amor against judgments entered against it on claims covered under the Policy. The Policy limits were $1,000,000. Century also issued a $5,000,000 excess insurance policy (“Excess Policy”) that applied to claims covered under the Policy.

On November 12, 2006, Ronald Day was a volunteer on a three day mission trip with his church, Central Christian Church of the East Valley in Arizona to build a church in Puerto Penasco, Mexico. While Ronald Day was working on the church’s partially constructed roof, he stepped onto a 2 x 4 piece of lumber, which broke, causing him to fall and land on the cement foundation. Ronald Day sustained severe and permanent injuries that included severe brain injury to his frontal and temporal lobes and a fractured vertebrae in his lower back that required fusion of five vertebrae with two rods. Ronald Day and Heather Day filed a lawsuit against Amor in Arizona state court. On June 7, 2011, a jury returned a verdict in favor of the Days and against Amor for the amount of $891,750.00. The total judgment against Amor with interest is approximately $1,100,000.00.

Amor tendered its defense of the Day lawsuit to Century under the Policy. On March 4, 2011, Century denied Amor’s tender of the Day lawsuit based the contention that the Policy did not cover Amor’s liability for personal injuries that occurred in Mexico. Century did not defend Amor at the jury trial and refused to indemnify Amor by paying the Judgment. Century sued the Days regarding coverage. The Days counterclaimed as judgment creditors.

Plaintiff’s Contentions:
Amor Ministries asserted that the Days’ claims were covered under the insurance policy issued to it by Century, and that Century wrongfully refused to indemnify the Days for their loss. The Days claimed that as judgment creditors they were entitled to recover their judgment against Century, and Century ignored their demands for payment.

Defendant’s Contentions:
Century contended that the policy was for premises liability only, and that the accident, which occurred in Mexico, was not covered. Century further contended that Amor made misrepresentations in the application, and were judicially estopped to pursue the lawsuit based on its settlement of a separate action against its insurance agent.